Obama Proposes Office of National Insurance
The Obama administration has proposed creation of an Office of National Insurance in the Treasury Department to keep an eye on the industry as part of its plan for overhauling financial regulation. However, the proposal did not recommend federal regulation of insurance. It left open the possibility of allowing companies to select federal regulation under an optional federal charter – an approach that has been advanced in recent legislative sessions but not enacted.
The industry remains divided on the issue. The American Insurance Association (AIA) representing many of the large commercial insurers has been lobbying for years to create some form of federal regulation. Leigh Ann Pusey, President of AIA, said “AIG highlighted gaps in our insurance regulatory system. We had 20 different states with authority over 72 insurance subsidiaries of AIG just in this country.” She asserted that the states didn’t work together “until the crisis hit.”
The National Association of Mutual Insurance Companies (NAMIC) and other associations that represent smaller and regional companies oppose any measure that would interfere with regulation of insurance by the 50 states. The Independent Insurance Agents & Brokers of America (Big I) also lined up against federal regulation. Robert Rusbuldt, President, said “We’re pleased the Obama administration’s proposal retains the current state regulatory system and does not directly call for creation of a federal regulator.”